AUDUSD-Copper-China A50 trade far more interesting to me

So Macron is President of France. It’s time to stop obsessing the election, time to move on to another trade. AUDUSD-China A50-Copper is what I am looking at.

So Macron won the French Presidential Election 2017. We have multiple currency pairs doing that forex gap this morning. Examples:

  1. AUDUSD gaps down, goes up, is back lower.
  2. NZDUSD gaps down, goes back to positive for the day but still lower than Friday.
  3. EURUSD which is the star of the show gaps up, is now down for the day and lower than last week’s closing.

 

I don’t know what the market is signalling but this market rewards people who made a correction prediction weeks ago and should be concerned about taking profit now.

Latecomers who woke up early this morning to trade the election outcome or tried to front run at last minute on Friday night should be worse off. Consider this: EURUSD gapped up at market open but is trading in the negative now. If you went long this morning, you are losing money now. If you went short on Friday night, you might be profitable now but probably you were stopped out earlier today. Thankfully I know most people don’t trade like that.

At the moment, it’s better to wait for fog to lift before taking a stand on the Euro but I think markets should be correcting due to profit taking very soon. It is typical after all for markets to buy the rumour sell the news.

Take profit, move on, don’t obsess.

 

Forget about France, this trade is far more interesting

AUDUSD – Copper – China A50 trade is far more interesting for me. France stole the headlines so this story is tucked somewhere in the corner if it is in the news at all.

It is quietly unfolding. It has legs to continue. Industrial metals like iron ore which are associated with economic growth are collapsing. Coincidentally or not, the Baltic Dry Index agrees.

Industrial metals collapsing

Industrial metals collapsing | Screenshot from Tradingeconomics.com

 

I have no idea what a 20+% loss in iron ore means but I do understand this chart↓. I understand that AUDUSD, China A50 and Copper are highly correlated and they are all pointing down. Any one of these has the potential to make a big move. It’s absolutely sweet when everything is lined up with such a high level of confluence. See my backstories:

AUDUSD, China A50, Copper overlay, weekly chart December 2016 - present

AUDUSD, China A50, Copper overlay, weekly chart December 2016 – present

 

These 3 charts summarise AUDUSD, CHINA A50, Copper best

AUDUSD year to year lower since 2012. Falling/shorting would be in line with existing year to year trend.

AUDUSD lower year to year since 2013

AUDUSD lower year to year since 2012

 

Copper year to year lower since 2012; this year attempt to move past 2016′s 52-week high failed. Falling/shorting would be in line with existing year to year trend.

Copper lower year to year since 2012

Copper lower year to year since 2012

 

And then China A50 fallen out of big triangle. Unless China A50 finds support or recovers the triangle, the direction implied is bearish for rest of the year.

China A50 fallen out of big triangle

China A50 fallen out of big triangle

The next technical milestone is when each starts to go into negative for the year, which XCUUSD has been flirting with since last Thursday and is negative at the moment.

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.   Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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